Related-person status in customs valuation requires more than restrictive clauses in a distributorship agreement.

Restrictive clauses in a non-exclusive distributorship and import arrangement, by themselves, do not establish related-person status for customs valuation. Where the declared import price matches the supplier's published price list and there is no other proof of the relationship required under Rule 2(2) of the Customs Valuation Rules, 1988, enhancement of assessable value is unsustainable. The stated principle is that ordinary commercial restraints in a supply contract are not enough to bring the parties within the related-person test; the valuation must rest on evidence showing the requisite relationship and its impact on price.

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Issues: Whether the imported goods' assessable value could be enhanced on the footing that the importer and foreign supplier were related persons under Rule 2(2) of the Customs Valuation Rules, 1988.

Analysis: The contract showed a non-exclusive distributorship/import arrangement and permitted the supplier to appoint additional distributors if performance was not achieved. The declared price matched the supplier's published price list, which was not disputed. The restrictive clauses in the agreement were treated as ordinary commercial restraints and not as proof of a relationship falling within the rule governing related persons.

Conclusion: The relationship contemplated by Rule 2(2) of the Customs Valuation Rules, 1988 was not established, and enhancement of value was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Restrictive clauses in a commercial import agreement and a non-exclusive distributorship arrangement, without more, do not establish related-person status for customs valuation when the declared price is consistent with the supplier's published price list.

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